Average derivative estimation of hedonic price models

Conventional parametric techniques for estimating hedonic price models require a correct functional form. In this paper, we side-step this parametric shortcoming by estimating a hedonic price model using average derivative estimation (ADE). This semiparametric approach produces robust estimates of the marginal effects without assuming a specific functional form a priori. In our application of the model to a unique data set on Korean home prices, ADE produced estimates consistent with prior expectations, providing initial evidence that the model may represent a viable alternative when using the hedonic approach.